This ETF Is Up 24% This Year and Likely Headed Higher

The stock market has been off to a strong start to 2023 with the S&P 500 up 7% thus far. But one exchange-traded fund (ETF) that has been doing even better is the VanEck Semiconductor ETF (NASDAQ:SMH) – it's up 24%. The fund focuses on companies that are involved with semiconductors. With a global chip shortage ongoing and the need for chips in the future, this is an ETF that's probably going to continue rising in value in the years ahead.

It has the big names you'd want to invest in to capitalize on the need for microchips, including popular names such as Nvidia (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE:TSM), and Qualcomm (NASDAQ:QCOM). Nvidia and Taiwan Semiconductor are the ETF's two largest holdings at 13.8% and 11.7%, respectively. There at 25 holdings in the fund overall so there can be some volatility in the fund as it isn't nearly as diverse as larger, less focused ETFs. But with a net expense ratio of 0.35%, at least it's not a terribly costly fund.

For investors, this is one of the better growth-oriented ETFs you can hold in your portfolio. With the chip shortage potentially continuing into next year, many chipmakers are still struggling to meet demand. And with the biggest names in the industry all packaged within this ETF, this can be a much better option than buying these stocks individually.

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This fund has traditionally been a market-beating investment as in five years, the VanEck Semiconductor ETF has risen 154% in value while the S&P's gains over that stretch are a more modest 58%.